Alex Hormozi

Those are the three components of the business.

From an attraction perspective, that's the only one where you could have a very scalable front end.

You could just be running ads, you have content on the front end, super scalable.

now typically if you're selling services it's going to have a higher ticket if it has a higher ticket usually a person is involved so you might have a person who's taking phone calls or meeting with customers at their homes or meeting in person in order to convert or transact all right close the sale once the customer is you know has transacted now we have to deliver and it's a service business which means that you have people who are involved in the delivery you do some sort of services to them all right now

What becomes challenging about this is that as you scale, it is easier to go find more product to sell than it is to find exceptional people.

Significantly harder.

And if the thing you sell is people with a premium, which is what a service business is, then you have to find very good people.

And very good people are even harder to find, right?

And they also cost even more money.

And so service businesses in general...

you want to run significantly higher gross margins than the other three

They typically don't run high gross margins and you want to design them in a way that do run higher gross margins because you need the padding for the inevitable volatility that exists within the business.

And the volatility is a factor of when someone new comes into any function of the business, whether you're doing outbound on the front end or running ads, you're doing sales or you have delivery.

If you have one sales guy, when you hire the next sales guy, he's not gonna be as good as the first one.

because he's gotta get trained up.

And so we have to be able to swallow, slow down, we have to be able to deal with the padding here, we need some cushion for the pushing, if you will, on how much gross profit we can have here, because if our conversion rate drops in half because our new sales guy's not as good, right, he's gotta get up to speed in 30 days, then we gotta be able to eat that, calm down.

All right.

Now the next thing is that on the delivery side, let's say we've got one good account rep or two good account reps and they've been with you for five years.

Okay.

We finally figured out a little bit more marketing, a little more selling.